Slow lending, high tax not a winning formula

Cautious lending and extremely high land tax has tightened land supply in South Australia, despite the state recording lower population growth than other parts of the country.

The Urban Development Institute of Australia has called for lots that have already been identified in the 30-year Plan for Greater Adelaide to be rezoned as sites for residential development.

The UDIA’s latest State of the Land Report predicted an increase in demand for new stock in the months ahead and cautioned that the slow rate of land coming to market could lead to demand exceeding supply.

South Australia’s land tax, the highest in the country, encouraged developers to hold minimum stock levels to avoid paying the tax, the UDIA said.

Despite the state’s 30-year plan, developers have struggled with negotiating for core infrastructure such as roads and water to be constructed, the report noted.

AV Jennings chief operating officer Mark Henessy-Smith said that the state’s land supply and planning tended to be stable as developers had a good sense of the charges that they would face.

“My overall view is that South Australia has the best planning regulations for delivering land and infrastructure in Australia; we’ve managed to avoid the disastrous circumstances seen in NSW and Queensland,’’ he said.

Mr Henessy-Smith said the market was tough at present and he expected a more balanced environment in the next year.